Emerging Markets, Frontier Markets

How Brazil And China Are Investing In Africa

200px-Africa_orthographic_projection.svg_1After the economic slow-down, inflation and recession – and perhaps, some most pessimistic might say, the eminent down-fall of BRICS, all eyes turn to Africa as the new best thing regarding investments. Brazil and China have already been investing heavily in Africa, but how and where these two countries are investing in the African continent are strikingly different.

China has been investing in infrastructural development such as, building highways in Tanzania, financing electricity projects in Sub-Saharan Africa and constructing whole towns in Angola. Most recently, Ethiopia made the headlines as the first African Sub-Saharan country to have a metro system. At Addis Ababa the light-railway system funded by China and it will be run for the next five years by the Shenzhen Metro Group and China Railway Engineering Corporation. Chinese money is also paying for a new full-sized railway in Ethiopia, connecting Addis Ababa to Djibouti, which is planned to open next year, as well as new lines in Kenya and Nigeria.

However, Chinese companies are still learning in the African industry. According to  the Chinese commerce ministry, it is estimated that 65% of Chinese foreign direct investments make a loss; compared with a 50% international norm. However, in the price-sensitive African market, any investment of this kind is always welcomed.

For Brazil, investing is Africa has a very different motivation. The country aims to help Africa by transferring knowledge and technology, while at the same time using shared history and culture to form bonds. And, of course, as a mineral-rich nation itself, Brazil has the luxury of obtaining raw materials from Africa and re-selling them elsewhere.

Angola and Mozambique have been the two countries where Brazil has been cooperating the most, due to their natural resources and for being Portuguese speaking countries too. The Brazilian industry of engineering and construction, represented mainly by  Norberto Odebrecht, Andrade Gutierrez, Camargo Corrêa, Queiroz Galvão and EMSA also have expanded its presence in Africa, especially Angola and Mozambique.

Technology transfer and development of new drugs – especially HIV/AIDS – also have been one of Brazil’s cooperation with Africa. In 2008, Fiocruz, a Brazilian pharmaceutical company, opened in Mozambique and started to produce a retroviral medication and it is the first of its kind in the continent.

The growing interest in Africa can also be explained by Brazil’s ambition to obtain a permanent seat in the UN Security Council. This is one of Brazilian diplomacy’s top priorities for reasons of both prestige and principle. Brazil is therefore counting on the support of Africa. Africa is becoming a space that can multiply Brazil’s power.

About Ana Paula Picasso

Brazilian born Market Research Analyst based in Sweden - specialized in #Brazil and #emergingmarkets. All opinions are my own. Follow me on Twitter @a_picasso

Discussion

4 thoughts on “How Brazil And China Are Investing In Africa

  1. Interesting for Brazil’s foreign policy .Hope it could help rebalance the overexposure of some African countries to the Chinese economy volatility as Zambia. And i have to add that China is interested in commodities in Africa for its own emerging economy

    Like

    Posted by Eyes on Europe and The Middle East | November 10, 2015, 1:03 am
  2. Reblogged this on World Peace Forum.

    Like

    Posted by daveyone1 | November 10, 2015, 9:43 am

Trackbacks/Pingbacks

  1. Pingback: How Brazil And China Are Investing In Africa | msamba - November 10, 2015

  2. Pingback: How Brazil and China are investing in Africa | The Emerging Markets Hub - November 11, 2015

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